Complete nonsense from @richardjmurphy

Complete knobgobbling stupidity on display here.

From the Guardian this morning:

One of America’s biggest healthcare providers, McKesson, gave its chief executive, John Hammergren, a 190% pay rise last year to $150m.

Welcome to the new NHS.

Welcome to the corruption at the core of modern capitalism.

Err, no. We do get that statement in The Guardian, true.

One of America\’s biggest healthcare providers, McKesson, gave its chief executive, John Hammergren, a 190% pay rise last year to $150m.

But then everyone knows that we shouldn\’t believe numbers that we see in The Guardian.

It\’s not difficult to find out what CEOs in America are paid. Here for example.

His pay, as pay, was $1,664,615 last year. A healthy sum to be sure, but some $148,400,000 or so short of the sum alleged.

We can also see that there is a $150 million number there on his pay page. That\’s the entire value of his stock options over the period.

That period, I assume, being since he took over as CEO back in 2000. From the low point of $15 the share price has risen to $84.  Note that that low point was just about when he did take over. Current market cap is $21 billion, meaning that he\’s, well, OK, perhaps he hasn\’t produced, but his term as CEO is at least correlated with, a rise of $15 billion in value to shareholders.

Which is pretty good really. And he\’s got 1% of the value created for shareholders on his watch.

This is what we want to happen isn\’t it? That shareholders pass on to the workers some of the surplus value extracted from them?

The original allegation comes from Phillip Inman the \”economics correspondent\” for the Observer and Guardian. Wouldn\’t it be nice if someone in such a position were able to distinguish between \”pay\” and \”options\”? Further, between \”pay rise this year\” and \”earnings over more than a decade\”?

And wouldn\’t it be even more interesting if one of the country\’s leading accountants, leading tax experts, were actually able to read a pay report?

And just to put the icing on the top of the cherry of the cake sitting atop the entire ice cream sundae, do you know what it is that McKesson does?

It\’s not a healthcare provider that\’s for sure. It\’s a pharmaceutical wholesaler and distributor. You know, a competitor in a market which in the UK is already entirely private sector? Its other division provides computers and software to the medical industry. And believe me, it would be cheap at the price to pay someone $150 million to provide something that worked, rather than this £12 billion and rising we\’ve pissed away on Connecting for Health.

So, not a healthcare provider, not a 190% pay rise and absolutely sweet fuck all to do with any changes proposed for the NHS.

Well done lads, you can be proud of your research skills here. Took me all of 15 minutes to work this out.

17 thoughts on “Complete nonsense from @richardjmurphy”

  1. Options are pay. There’s absolutely no reason to account for them differently; they’re taxed as income; and they’re covered in company accounts as a staff cost.

    Your other points are spot on.

  2. But it doesn’t matter.

    They are evil, money grabbing sc*m. Even if you are right, Tim, you are wrong.

    They sell things to the state. This is inherently evil and should be nationalised and all that misspent profit used for whatever the politicians and Mr. Murphy, who has a real handle on the injustices of our world, decide.

    Get your head round it, Tim. Data and truth don’t come into it. And, of course, you are evil for trying to get to the bottom of it.

    @david jones
    obviously, Tim had fried babies for breakfast

  3. Yes, but in Guardian world the State spending £12bn on a non-working computer system is fine because the government spending your tax payments is good, whereas you spending your own money on a private health system is evil because someone will be making (shock horror) a PROFIT somewhere along the line, even if the private sector could provide a (working) computer system for half as much.

  4. “This is what we want to happen isn’t it? That shareholders pass on to the workers some of the surplus value extracted from them?”

    Delicious. That has made my day.

  5. “Options are pay.”

    No, they are a potential reward. They may turn out to be worthless (every option I’ve ever had vest has).

  6. “the private sector could provide a (working) computer system for half as much.”

    The private sector provided the non-working computer system for a stonking profit.

    The difference is that when the government is the buyer, doesn’t know what it wants, doesn’t know what it should cost, it gets bilked.

  7. John B, I think Tim’s main point was that the gain on the options were not this year’s pay, but were spread over 10 years (and more, since they may still not have crystallised).

  8. Better private sector efficiency at a 5% profit margin than public sector muddle spending 30% more than is necessary.

  9. @johnb – options are pay only when they exercised. Until then they are just values on a piece of paper. Also bear in mind that shares can go down as well as up.

  10. Well, you can’t be surprised at this tosh, Tim, even though we are all grateful to you for bringing this complete arse-gravy to our attention.

    I am, as I occasionally link to the usefully-provided Ritchie links, reminded of a concept I invented, which was Pro-celebrity boxing. Tyson vs. Brucie springs to mind…

  11. KT/SBML: all mine have turned out to be worth a fair amount, which is agreeable (and I suspect not intended by my manager at the time). But in general, CEO options are different from employee options, in that they’re mainly intended to pass a great deal of money to the CEO without hitting the cashflow – and hence, unlike employee options, deliberately set so that everyone will always achieve them.

    Richard: Tim made two points, one of which I agree completely with and one of which I don’t. The one I agree with, as you say, is that accounting for 10 years’ pay as a year’s pay is stupid. The one I don’t is the suggestion that options are anything other than a way of paying bonuses that’s gentler on the cashflow.

  12. Pete:

    The beauty is that, in purchasing from the private sector, the gov’t. need not worry even a bit whether the seller is making 5%, 10%, or 250% (or, mebbe, losing 20%)–as long as they’re getting what they need at the best price possible.

    It’s simply an exercise in mind-reading to understand why any other policy would become regular. Both ignorance and crookedness are the usual suspects, with an uncertain combination of the two as the most likely explanation.

  13. At least we know that there’s no chance of a Guardian journalist hacking someone’s phone for information, far less bribing policemen- they can’t even be bothered to google.

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